In Order to Assure Allocative Efficiency

question 4

Multiple Choice

In order to assure allocative efficiency,

• A)people's marginal rate of substitution must equal the economy's rate of product transformation.
• B)people's marginal rate of substitution must equal the firm's rate of technical substitution among inputs.
• C)a firm's rate of technical substitution must equal the economy's rate of product transformation.
• D)all of the other answers are correct.

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Definitions:

Agribusiness

The business sector encompassing farming and farming-related commercial activities, involving the production, distribution, and marketing of agricultural goods.

Government Policies

Rules, regulations, and actions taken by a government to control or influence its country's economy or society.

Price Subsidies

Financial assistance provided by governments to lower the cost of goods or services, making them more accessible to consumers.

Income Subsidies

Income subsidies are financial assistance programs provided by governments to individuals or households to help them afford essential needs, thereby increasing their income.